Should we accept £322.89 Endowment Compensation

AnnieD_2

Hi, please help me,

We were complaining about a mortgage sold to us in 1993. We already had an Endowment mortgage when we took this one out, and as we were increasing our mortgage, the advice given to us was to top it up with another endownment mortgage.

In the 6 page (fairly scary!) reply letter they dispute this as they have documents (and they have sent us photocopies) where boxes were ticked saying all other options were discussed and leaflets were handed out. It was also written that 'we were aware of the benefits and pitfalls and wish to continue with the Endownment type of mortgage'.
Our interpretation of this was that the other options may have been mentioned in passing, but the endownment was stressed as the best option as we had one already for half the amount being borrowed. We just went along with their advice. As for being aware of the pitfalls, we just remember being told that the mortgage will be paid off with a nice lump sum to go with it.

The payment is because we stated a 'conservative' risk attitude but were sold 50% with profits, 50% Managed funds. Apparantly the managed funds were not appropiate for our attitude to risk so the £322.89 is the difference between the funds if we had had 100% with profits.

I can't help thinking we are being cheated. We went along with their recommendations and now it is their word against ours and I feel like we don't have a leg to stand on. I know we don't have to accept this and can take it further but is there any point? If we turn it down will we lose the chance of this money and maybe end up with nothing at all?
Here's hoping someone can help me!
AnnieD

dunstonh

The payment is because we stated a 'conservative' risk attitude but were sold 50% with profits, 50% Managed funds. Apparantly the managed funds were not appropiate for our attitude to risk so the £322.89 is the difference between the funds if we had had 100% with profits.

ironically, looking forward, the managed fund is more likely to achieve target than the with profits fund.

The FSA tends to take the view that if there is no documentary evidence, it didnt happen. There are three truths, yours, the advisors and what really happened. In this case there is documentary evidence. A couple of tick boxes wouldnt, IMO, be considered enough and if that was the only thing, then you would have a better case. However, it does say on the report, which you were given a copy of and had the opportunity to disagree with back then, that you were aware of the benefits and pitfalls.

The language used by the advisor isnt great. Pitfalls doesnt actually tell you anything but it does give the impression that there is a downside that you are aware of. It would certainly not be acceptable under todays standards. My view is that its just borderline acceptable for 1993. The complaints dept of the advisor seems to think it is.

AnnieD_2

Thank you DD for your reply. Your comment about the managed funds was intresting as we have been given the option to convert all to 'with profits'. Maybe we'll just leave it as it is.
As for the documentation, again we have a very different interpretation of how things were presented i.e. a shortfall wouldn't happen and we would end up with the mortgage paid off and a lump sum. Like nearly everybody we were niave and went along with the advice we were given. The documented evidence may state the repayment morgages were discussed with us but not that they were mentioned in a negative light with all the emphasis put on an endowment mortgage.
I realise that we probably don't have a leg to stand on if we appealed so I suppose the best option is to take the money and put it down to experience.
Thanks again for your advice,
AnnieD

dunstonh

Give me a crystal ball and i will tell you if managed or with profits is best

However, looking forward, with profits funds carry a lot of baggage from previous drops and endowment compensations. Apart from Pru, L&G and NU, I wouldnt be comfortable in a with profits fund. The managed fund offers greater potential but equally it offers lower guarantees. You may wish to investigate what other unit linked funds are available. Managed funds tend to be a miss match bodge. There may be some gilt, property and specific equity funds available which a combination of these may perform better.

Im not saying dont take the issue further. Im just saying that conversations that you say happened are probably being denied by the company so its only documentary evidence that can be relied upon.

There are an awful lot of dodgy endowment claims going on as well as genuine ones. Its easy to say that you were told nothing as no-one can prove what was or wasnt said. However, the paper trail is hard to dispute.